ICTC 2020: Becoming an Innovation Anticipator

Where are most InsurTech companies innovating right now?

The McKinsey Insurtech Database contains 500 cases of innovation spending within the industry. The data shows that more than half of the cases were focused on innovations in Cloud/SaaS, Machine Learning, and UBI. Other cases included IoT, Robo Advisory, and Gamification.

Most CEOs believe their companies offer a superior experience, and almost all of their customers disagree

8 out of 10 CEOs will tell you that their insurance product or service is fantastic. 

However, only 1 out of 10 customers will happily agree with this statement. There is a clear gap in how executives and customers view the experience. This can be understood by collecting data from customers and analyzing it. For example, data on adaptability and user experience could provide insight into where customers face issues with the product or service.

Companies will cease to exist if they do not innovate

Currently, the industry consists of Anticipators, Fast Followers, and Survivors. An astonishing majority of companies fall into the Survivors group, and only focus on short-term performance. For these companies to continue forward, they must innovate and create their own futures. In other words, they must become Anticipators. In attempting to do so, many will become Fast Followers, meaning they will watch industry leaders and mould their strategies accordingly. To become a Fast Follower still takes an innovative approach: companies must be willing to innovate in order to become agile and adapt to changes quickly.

You can become an Innovation Anticipator

The key to becoming an Anticipator is embracing digital innovation. Anticipators focus on implementing digital leadership and creating a digital workplace. Digital business becomes the core of their organization’s strategy. As a result, Anticipators reformulate products and services for the digital customer. In order to succeed at this, these industry leaders collaborate with peers to share data and ideas, and use a Lean Startup approach to test their prototypes out.

70% of insurers believe data from IoT is important – but only 5% actually use it

There is a large number of industry professionals that claim IoT is essential to their company’s strategy. However, only 20% of these insurers actually collect data using IoT, and an even smaller percentage are making use of the data they collect. This valuable data can guide companies on how to innovate to survive, and this will ultimately help them close the gap between company and client perceptions.

If innovation is so crucial, why do organizations only dedicate 5% of their budgets towards it?

Most companies dedicate 95% of investments and resources towards maintaining and improving legacy systems. This budget approach is a result of focusing on short-term problems alone. This leaves very little for innovation, which will ultimately determine a company’s chances of survival in the long-term.

Innovation does not have to be expensive

Everyone knows innovation is important, but there aren’t enough companies working toward it. Most companies assume innovation will impact their budgets extensively. The truth is that innovation does not need big teams and big money. Spaces, such as Cookhouse Labs, use a collaboration approach where a few industry members are brought together with a few resources. Costly mistakes are avoided when different backgrounds come together. The result of combining these diverse experiences is a shared solution that the industry can implement on a budget. 

All InsurTech companies want to be Innovation Anticipators, and they can achieve this, too. The secret recipe is collaboration, which combines data, funding, and experience to create big solutions to future industry challenges. 

And one day, this co-creation will be successful in making insurance better for the whole industry.

Design and innovation

If we think about it, innovation is what drives the world forward, making life easier, more efficient and enjoyable, design is the catalyst that magically transforms a simple insight into a tangible product or service by providing the focus and structure innovation needs.

George Cox states that “creativity is the generation of new ideas. … Innovation is the successful exploitation of new ideas. … Design is what links creativity and innovation.”

How can we define the relationship between design and innovation?

A company’s understanding of the word design affects how it applies the notion of what constitutes design during the innovation process. When innovation is seen as a linear process of scientific and technological development, Design is tasked with making the resulting technologies presentable, principally through styling. Sadly, the common practice is to associate design only with aesthetics, and innovation with something new, although that is not the best way to define those terms.

There is a wide variety of meanings attributed to design inside organizations, and as a result, its impact may extend beyond pure styling activities. The term design, which originally had a very narrow definition, (‘Konstruktion’) has evolved into one with a broader meaning. A designer has suddenly been transformed into a developer or even an innovator.

Where does innovation come from?

For many organizations, innovation is not a central part of their strategy. Only when there is a disruption (a new or reinvigorated competitor) does innovation become important again. If we try to innovate too quickly, we end up with ideas that merely reflect consumers’ current needs. They will be popular today but won’t be distinct enough to be valued in the future.

Successful innovation requires the careful evolution of new ideas. In some cases, it is a response to a specific problem; in others, it’s driven by a creative’s imagination, by someone who looks at a product, service or process and thinks, “This could be better.” And, please note the mention of a creative and not a designer or scientist.

How does design influence innovation?

Design is a facilitator of generative thinking. Designers are trained as divergent thinkers with an iterative problem-solving approach to the innovation process. The ability to produce novel solutions, a willingness to take risks, accepting high levels of ambiguity and uncertainty, thinking out of the box and a passion to drive ideas through to conclusion while inspiring passion in others are some of the skills designers possess.

Design’s capacity to visualize ideas helps transform ideas into concepts. The effective use of visual and communication tools reduces misinterpretations. It also provides stakeholders with a clear understanding of the business and its position concerning its customers and other actors.

Design is generally seen as an activity, rather than having holistic influences on all areas of innovation. When design is only used to make moderate changes to the external appearance of a product (e.g., a change in its packaging or improving sales support as strategies to achieve differentiation in the market), it becomes a waste and a minor exploitation of what it could contribute to the creative process.

Design is all about questioning what it is and what it should be.

Beyond originality, beauty, and aesthetics, designers are interested in the problem design solves and the people whose lives are changed for the better because of it. How is it solving the problem it was designed for? What new approaches have been taken in this solution? Is it offering an improvement over other designs or is it just new? By learning to interpret, translate and negotiate requirements with users in iterative cycles while seeking an optimal and novel solution, innovation is born.

One of the four main drivers of innovation and productivity in all advanced economies is design.

Design aims to demonstrate new thinking and/or solve a problem in a new way, searching a broader impact and application beyond the specific instance of the design by affecting behaviour in a meaningful way. Herbert Simon famously defined design as the process of changing existing states into preferred ones. No wonder that design plays an important role in encouraging users to adopt innovations.

An increasingly important role for design is concerned with exploring and understanding product/user interactions. Tailoring these is a way of connecting customers, products and brands. The ability to understand, anticipate and design the interactions between users and products becomes especially important when creating a bridge between scientific knowledge and new technology to produce a usable end product. There are new, “inventive” technology-driven products that introduce new functionalities, but it is only when functionality is driven by people and connects to human needs that innovation occurs.

Innovation and design complement each other. By properly stimulating their growth, organizations can see what is coming next, move to lead the change and ensure a successful business in the future.